Tolerance Cures and the Good Faith Estimate

When a lender is preparing a good faith estimate, the financial institution will create a list of additional costs, and each fee is associated with a level of tolerance. The costs can be related to numerous services, such as appraising the property, initiating a wire transfer, homeowner’s insurance, analyzing the borrower’s credit report, underwriting the loan and title insurance. Here, Acuity provides the second of four parts to clearly define Tolerance Cures and the Good Faith Estimate.

Points and the Interest Rate

Many financial institutions allow buyers to pay upfront fees, which are called points, and each credit decreases the loan’s interest rate by a small percentage. Generally, the cost of every point is equal to one percent of the total loan. According to several laws, the value of points may not be altered after a financial institution has determined the interest rate of the loan.

Daily Interest

After a borrower completes the closing statement, the lender will likely charge these fees for one day to 29 days. For example, a buyer who signs the documents on the 20th day of the month will typically pay daily interest for 10 days. Subsequently, the monthly interest rate is used.

Transfer Taxes

When a title is transferred to a new owner, information about the transaction will be recorded in the state government’s archives. A person who receives a gift of real estate will also have to pay the transfer tax. The total amount of these fees may not change during the process of finalizing the loan.

Escrow Accounts

Many borrowers place a portion of each monthly installment in a third-party account, and these funds will be used to pay property taxes and to obtain homeowner’s insurance. If the buyer opts to put funds in an escrow account, any fees that are associated with the transaction may not increase.

 

In today’s market, you need an agile title and closing partner that has its feet on the ground. Contact Acuity National Real Estate Solutions, a Freibert & Mattingly Title Group LLC company, today at 502.238.7500. To learn more about Acuity’s services, visit www.ftgclosings.com.

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